Hi all,
I have a question I would like to offer regarding mortgage payments.
we are soon to come to the end of our current fixed rate term so I have contacted our provider to see what options are available. we can re-fix the rate or let it track the current base rate. If we re-fix there is very little difference to what we have now, but if we let it track for a while it could be £100+ lower payments, we can fix at anytime with the deals available then. I know this can be a risk but cannot see the rate changing significantly for a while, so what are the consequences to the IVA of tracking?
1. do all the monthly savings go directly to the IVA
2. If tracking, the monthly payments could vary with baserate, so would we have to submit I&E every month
has anyone got a tracking mortgage? how does it fit in with IVA
Thanks
many a mickle makes a muckle ...... if only I hadn't spent all the mickles
I think you would have to pay the majority of the savings across and of course once the interest rate goes up again you would have to ask for a reduction in payments again.
We're on SVR so stable at the moment but I dread it when the rate goes up.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
Hi Darkdog
Rising mortgage rates is a question that gets raised regularly on here. I think the IPs on here do a great job in providing info for clients and potential clients but I do not feel they have provided a satisfactory answer to this.
I think the options are below:-
1) you find the extra from your other allowances (not practical)
2) You try to switch to a interest only mortgage (i.e. transfer short term debt to long term debt - not attractive)
3) IPs can reduce your payments by 15% without going to creditors. However this will extend the length of your IVA as the shortfall in payments will add extra months payments at the end. Also, on an average 150k mortgage a 0.25% interest rate rise is about £25. So for example 1% rise which is inevitable over the next 5 years is about £100 rise in mortgage payments. So the 15% reduction may not cover the increase costs anyway.
4) Variation by IP and creditors. I cannot see this as practical. How long does it take for a variation (4 weeks?) how can this be done for up to 80% of everyone in an IVA? The interest ratew can be very variable. So a variation for everyone with a variable mortgage rate every time the rate moves?
I think I have run out of options. None of the above sound particularly attractive and I would be very suprised if anyone is made clear at the time of application that they will have to face these options at some point during their IVA.
Any IP comments would be appreciated. The 'we will have to wait and see what happens to interest rates' approach is not a prudent planning approach to someething that is definately going to happen.
We are currently looking at an IVA and have a tracker mortgage, although it tracks the base rate the payments are reviewed every february and then fixed for the next 12 months, we have the option of calling to ask for the mortgage payments to be varied during the year if interest rates fall or increase but otherwise it is just a yearly review. Perhaps speak to your lender to see how they run their trackers?
Even on the SVR, payments don't always change every month depending on the product, it depends whether they review them annually or monthly.
Sharing from experiences of dealing with debt
The greatness of a man is not in how much wealth he acquires, but in his integrity and his ability to affect those around him positively.
Bob Marley. http://kallis3.blogs.iva.co.uk
Just to make it clear that Insolvency Practitioners are not qualified or permitted to give their clients mortgage or investment advice - neither are we able to do so in open forum.
The effect of any change in mortgage payments, will have to be dealt with in the mechanics of the IVA. If a lower payment is being paid, this may result in an incrase in disposable income - and some or all of that may need to be paid over by way of increased contributions. If the mortgage payments increase, this may affect a clients ability to fund their payments, in which case the IP may be able to agree a reduction with or without seeking sanction from creditors.
